Correlation Between HUMANA and Investcorp India

Can any of the company-specific risk be diversified away by investing in both HUMANA and Investcorp India at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining HUMANA and Investcorp India into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HUMANA INC and Investcorp India Acquisition, you can compare the effects of market volatilities on HUMANA and Investcorp India and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in HUMANA with a short position of Investcorp India. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUMANA and Investcorp India.

Diversification Opportunities for HUMANA and Investcorp India

-0.19

Correlation Coefficient

HUMANA  Investcorp India

Good diversification

The 3 months correlation between HUMANA and Investcorp is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and Investcorp India Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investcorp India Acq and HUMANA is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on HUMANA INC are associated (or correlated) with Investcorp India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investcorp India Acq has no effect on the direction of HUMANA i.e., HUMANA and Investcorp India go up and down completely randomly.

Pair Corralation between HUMANA and Investcorp India

Assuming the 90 days trading horizon HUMANA INC is expected to generate 196.21 times more return on investment than Investcorp India. However, HUMANA is 196.21 times more volatile than Investcorp India Acquisition. It trades about 0.07 of its potential returns per unit of risk. Investcorp India Acquisition is currently generating about 0.06 per unit of risk. If you would invest  7,953  in HUMANA INC on September 12, 2024 and sell it today you would lose (258.00) from holding HUMANA INC or give up 3.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.94%
Values	Daily Returns

HUMANA INC  vs.  Investcorp India Acquisition

HUMANA INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HUMANA INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for HUMANA INC investors.

Investcorp India Acq

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Investcorp India Acquisition are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Investcorp India is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with HUMANA and Investcorp India

The main advantage of trading using opposite HUMANA and Investcorp India positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HUMANA position performs unexpectedly, Investcorp India can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Investcorp India will offset losses from the drop in Investcorp India's long position.

The idea behind HUMANA INC and Investcorp India Acquisition pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.